COSTS INCURRED DURING THE YEAR 2020:

SALES REVENUE DURING 2020 WAS $600K. THE TAX RATE=21%

CALCULATE:

1. COST OF RAW MATERIALS USED

2. COST OF GOODS MANUFACTURED/COMPLETED

3. COST OF GOODS SOLD

4. GROSS MARGIN

5. NET INCOME

1- Assume that the following data relative to Rice Company for 2020 is available

Net Income $3,984,000:

Transactions in Common Shares Change Cumulative

Jan. 1,2020 Beginning number 650,000

Apr. 1,2020 Purchase of treasury shares (50,000) 600,000

June 1,2020 100% stock dividend 600,000 1,200,000

Dec 1,2020 Issuance of shares 200,000 1,400,000

5% Cumulative Preferred Stock:

$1,000,000 sold at par on January  1,2020 convertible into 200,000 shares of common stock

Stock options:

Exercisable at the option of $30 per share. Average market price in 2020, $35 and there were 60,000 options outstanding since 2017.

(A) compute the basic earnings per share for 2020. (round to the nearest penny)

(B) compute the diluted earnings per share for 2020. (round to the nearest penny)

1. On January 1, 2019, ABC Company purchased a new piece of equipment.
The equipment was assigned a $7,000 residual value and is expected
to produce a total of 60,000 units over its life. The depreciation
expense reported on the equipment for 2019 was $10,734. During 2020,
the equipment was used to produce 9,000 units. At December 31, 2020,
the book value of the equipment was $57,466. ABC Company is using the
units-of-production depreciation method to depreciate the equipment.

Calculate the original cost paid by ABC Company to purchase the
equipment on January 1, 2019.

2. On June 1, 2018, XYZ Company paid $150,000 to purchase some equipment.

The equipment was assigned a useful life of 20 years and was to be
depreciated using the straight-line method.

On October 31, 2022, XYZ Company sold the equipment for $102,970 cash.
XYZ Company recorded a loss on the sale equal to $14,965.

Calculate the residual value that was assigned to the equipment.

You are the CEO of a corporation whose board has just decided to cut the dividend to the stockholders. This is a matter of absolute confidentiality, as it could have major effects on your stock prices if the information gets out before implementation of the cut.

At a reception, you are approached by an elderly gentleman, who retired from the company several years ago. Virtually all of his savings and much of his retirement income is in company stock. He asks, point blank, whether he should sell some of his stock, in order to obtain some needed funds for living expenses. You know that he knows a "yes" answer will indicate some dramatic decision, such as a decision to cut the dividend, is impending. If you tell him "no," he could lose considerable value on his stock.

Questions:                                                                             

Do you tell him? What???

What do you say?

If you tell him, could it affect your company?

Could this affect your own job?

Give your suggestion and advise in your own words.

Pay Packages Explained

Executive pay packages differ substantially from typical salaried or hourly employee compensation because unlike typical employee pay, the vast majority of an executive's pay is contingent compensation and structured only to reward the executive for actual, positive company performance and growth in shareholder value. To this end, executive compensation packages typically utilize six distinct compensation components:

Base Salary

Short-Term Incentive

Long-Term Incentive

Employee Benefits

Perquisites

Severance/Change-in-Control Payments

A company's Compensation Committee will structure their executive's pay packages utilizing a combination of the above components to help achieve the company's Pay for Performance and/or Retention objectives.

Using this article and the text, work through the following: You are on a BOD and head of the compensation committee. The company sales are flat, profitability in the lower quartile for the industry that is growing at 5% per year. Outside consultants have determined it will take three years to turn the company around. Develop a structure for a compensation program for the CEO and key officers. Define the elements, potential measures and targets for a comp program.

Ayayai Corp. experienced a fire on December 31, 2020, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances.

Additional information:

Compute the following for Ayayai Corp.. (Round all answers to 0 decimal places, e.g. 2,150.)

Armstrong Inc. did a physical inventory count and accidentally overstated ending inventory on the 12/31/18 financial statement by $20,000. The company noticed the error during 2020, before books were closed. The 2020 inventory was not affected since physical inventory was adequately counted. How would Armstrong Inc correct this error in 2020, assume a 21% tax rate.

On January 1, 2020, Bubble Corporation signed a five-year noncancelable lease to obtain a bubble machine. The terms of the lease called for Bubble to make annual payments of $90,000 at the beginning of each year for 5 years. The equipment has an estimated useful life of 7 years and no salvage value. Bubbles effective interest rate is 10%. The fair value on Jan. 1, 2020 of the asset is $500,000. With respect to this lease, what should Bubble record for 2020?

Placid Lake Corporation acquired 70 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2020, when Scenic had a net book value of $410,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $4,000 per year.

Placid Lake's 2021 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $310,000. Scenic reported net income of $120,000. Placid Lake declared $110,000 in dividends during this period; Scenic paid $41,000. At the end of 2021, selected figures from the two companies' balance sheets were as follows:

During 2020, intra-entity sales of $80,000 (original cost of $44,000) were made. Only 10 percent of this inventory was still held within the consolidated entity at the end of 2020. In 2021, $100,000 in intra-entity sales were made with an original cost of $60,000. Of this merchandise, 20 percent had not been resold to outside parties by the end of the year.

Each of the following questions should be considered as an independent situation for the year 2021.

1. What is consolidated net income for Placid Lake and its subsidiary?

2. If the intra-entity sales were upstream, how would consolidated net income be allocated to the controlling and noncontrolling interest?

3. If the intra-entity sales were downstream, how would consolidated net income be allocated to the controlling and noncontrolling interest?

4. What is the consolidated balance in the ending Inventory account?

5. Assume that no intra-entity inventory sales occurred between Placid Lake and Scenic. Instead, in 2020, Scenic sold land costing $31,000 to Placid Lake for $52,000. On the 2021 consolidated balance sheet, what value should be reported for land?

1. f-1. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2020, Scenic sold equipment (that originally cost $110,000 but had a $61,000 book value on that date) to Placid Lake for $82,000. At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December 31, 2021, consolidation of these two companies to eliminate the impact of the intra-entity transfer?

2. f-2. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2020, Scenic sold equipment (that originally cost $110,000 but had a $61,000 book value on that date) to Placid Lake for $82,000. At the time of sale, the equipment had a remaining useful life of five years. For 2021, what is the noncontrolling interest’s share of Scenic’s net income?

Problem 23-04

Sarasota Company had the following information available at the end of 2020.

Prepare a statement of cash flows for Sarasota Company using the direct method accompanied by a reconciliation schedule. Assume the short-term investments are debt securities, classified as available-for-sale.

Carla Corporation provides a defined contribution pension plan for its employees. Under the plan, the company deducts 5% of each employee’s gross pay for each bi-weekly pay period. The company also contributes 6% of the employees’ gross pay to the pension plan. The combined pension contributions are then submitted to the pension trustee within 11 days of the end of the month in which the pay was earned.

For the first pay period of October (from Sunday October 1 to October 14, 2020), Carla’s total gross payroll was $174,000. Total gross payroll for the period October 15 through Saturday, October 28, 2020, was $173,000. The total anticipated payroll for the period October 29 through November 10, 2020, was $169,000 (employees worked Monday through Friday each week). On November 10, 2020, Carla submitted the pension contributions to the trustee for the month of October (including accruals up to and including October 31).

Prepare the October 14 journal entry to record the payroll, including employee and employer contributions to the pension plan. For simplicity, ignore income taxes and other statutory deductions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Prepare the October 28 journal entry to record the payroll, including employee and employer contributions to the pension plan. For simplicity, ignore income taxes and other statutory deductions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)